NCPA - National Center for Policy Analysis

NLRB Ruling Makes McDonald's Liable for Franchisee Actions

August 6, 2014

The Chicago Tribune reports that a decision from the National Labor Relations Board would hold McDonald's liable for its franchisees' employment decisions.

Currently, McDonald's has 13,000 franchised stores across the country. These stores make their own decisions about how to run their franchises -- deciding how many workers to hire, what to pay them, what their duties will be, and the like. Until now, labor law violations (failing to pay overtime, for example) were the fault of the franchisee, not the franchisor. But if the new NLRB ruling stands, McDonald's would become responsible for its franchisees' decisions.

Changing these rules would invite a flood of lawsuits against McDonald's, and it threatens the entire franchise model, for McDonald's and beyond. According to the Tribune, more than 8 million Americans work for franchises, constituting 15 percent of all private sector jobs.

Significantly, the fast food industry has added new jobs at a rate of 4 percent so far this year, as well as in the last two years.

Source: "The NLRB attack on McDonald's," Chicago Tribune, August 5, 2014.


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